Ch. 28 BLAW

Agent's Duties to the Principal

1. Performance/Diligence 2. Notification/Inform 3. Fiduciary Duties (Loyalty and good faith) 4. Obedience 5. Account

T/F: A power of attorney is a formal appointment of an agent.

True

Agent's Duty to Inform/Notify

A must tell P any important information -any notice to A, should be notice to P ex.) if someone put an offer on the house, realtor has duty to tell P

Agent's Duty to Performance/Dilgence

A must use reasonable care and skill

Mutual Agreement by parties

consensual, can agree to end anytime

Mel owns a retail store. Elizabeth is a salesclerk for Mel in the store. The relationship between Elizabeth and Mel is an example of: a. employer and independent contractor only. b. employer and employee only. c. principal and agent only. d. both employer and employee, as well as principal and agent.

d. both employer and employee, as well as principal and agent.

Charles hires Andrew, an attorney, to represent him in a lawsuit. The relationship between Charles and Andrew is an example of: a. employer and independent contractor only. b. employer and employee only. c. principal and agent only. d. both employer and independent contractor, as well as principal and agent.

d. both employer and independent contractor, as well as principal and agent.

renunciation

termination by AGENT ex.) Realtor no longer wants to sell the house

Formation of Agency Relationships

-can be informal or formal -always consensual -consideration is not required -Statute of frauds -Capacity

2 Kinds of Agency Relationships

1. Employee/Employer 2. Principal and Independent Contractor

Acts of the Parties that can terminate an Agency Relationship:

1. Lapse of time 2. Fulfillment of purpose 3. Mutual agreement 4. Termination by one party

Termination by one party

1. Revocation of authority 2. Renunciation

An agent loses the right to compensation by:

1. breaching the duty of obedience 2. breaching the duty of loyalty 3. willfully breaching the agency contract

Termination by Operation of Law

1. death 2. incapacity of P or A (unless theres durable power) 3. Loss or destruction of subject matter (house burning down) 4. changed circumstances (A finds out value of sub. matter or change such that P would probably not want to act further 5. change in law 6. disloyalty of agent (telling inside secrets) 7. war (between P and A

Electronic Agent

A computer program or an electronic or other automated means used independently to initiate an action or respond to electronic records or performances in whole or in part, without review or action by an individual.

Uniform Durable Power of Attorney Act

Act that allows individuals to set up a power of attorney that takes effect only if they are incapacitated.

Fulfillment of Purpose

Agent did whatever Principal engaged him to do

Irrevocable Agency

An agency contract that cannot be terminated by a principal in which the agent has an interest in the subject matter of the agency in addition to the remuneration that he or she receives for services

Termination of Agency Relationships

Can occur by acts of the parties or by operation of Law

Principal's Duty to Compensate

Duty that a principal must pay an agreed-upon amount to the agent or reasonable value Agency contract specifies the compensation to be paid

T/F: An agency contract must be in writing.

False

T/F: An agency coupled with an interest can be revoked at any time.

False

Capacity

P must have capacity A can bind P to contract even if A doesn't have capacity

Principal's duty to Reimburse

P must pay back authorized payments A has made on their behalf

Principal's Duty to Indemnify

P must pay for losses A incurred while acting as directed (unusual expenses)

Lapse of time

P's authority terminates at the expiration of the specific time -if no time is specified, the authority terminates at the end of a reasonable period

T/F: A principal may revoke an agent's authority at any time, but if he does, he may be in breach of his contract with the agent.

True

T/F: An agent is under a duty to keep her principal's property separate from her own.

True

T/F: Brian is appointed an agent for Independent Investors, Inc. Two months later, Brian files for bankruptcy because of personal debts arising prior to beginning work for Independent. Brian's agency is terminated by the bankruptcy.

True

T/F: Generally, any person has the capacity to be an agent.

True

T/F: Most contracts or business transactions can be created or conducted through an agent.

True

T/F: While an agent may not ordinarily use or disclose confidential information, she may reveal confidential information that the principal is about to commit a crime.

True

Equal Dignity Doctrine

Underlying transaction must also be in writing

Wilson engages Ruth to sell Wilson's antique walnut chest to Harold for $2,500. The next day, Ruth learns that Sandy is willing to pay $3,000 for Wilson's chest. Ruth nevertheless sells the chest to Harold. Wilson then discovers these facts. a. Did Ruth breach any duties to Wilson?

Yes, she breached her Duty to Inform/Notify and Duty to Performance/Diligence

Power of Attorny

a written statement by an individual giving another person the power to act for him/her.

Piedmont Electric Co. gave a list of delinquent accounts to Alexander, an employee, with instructions to discontinue electric service to delinquent customers. Among those listed was Todd Hatchery, which was then in the process of hatching chickens in a large, electrically heated incubator. Todd Hatchery told Alexander that it did not consider its account delinquent, but Alexander nevertheless cut the wires leading to the hatchery. Subsequently, Todd Hatchery recovered a judgment of $5,000 in an action brought against Alexander for the loss resulting from the interruption of the incubation process. Alexander has paid the judgment and brings a cause of action against Piedmont Electric Co. a. What can Alexander recover? b. What tort was committed?

a. Alexander has a right of reimbursement from Piedmont Electric Co. for $5,000. b. Damage to property

Timothy retains Cynthia, an attorney, to bring a lawsuit upon a valid claim against Vincent. Recently enacted legislation has shortened the statute of limitations for this type of legal action. Cynthia fails to make herself aware of this new statute. Consequently, she files the complaint after the statute of limitations has run. As a result, the lawsuit is dismissed. a. What duties did Cynthia breach? b. Can Timothy collect money; how much? c. What Tort also occurred?

a. Cynthia breached her duty to performance/diligence because she should've known the laws b.

employee-employer relationship

all employees are agents, but not all agents are employees -only considered an employee if P has HIGH DEGREE OF CONTROL of A

Gratuitous Agency

an agency created without consideration (aren't paid)

Fiduciary

anytime an individual can truly trust the other person

Agent's Duty to Obedience

as authorized by P + reasonable instruction/direction

Informal Agency relationship

asking your roommate to take your clothes to the dry cleaners for you

An agency terminates by operation of law upon the occurrence of any of the following except: a. Bankruptcy b. Fulfillment of purpose c. Death of the principal d. Disloyalty of agent

b. Fulfillment of purpose

An agent may be appointed to perform which of the following? a. Perform a contract for personal services b. Commit an illegal act c. Buy or sell goods d. More than one of the above

c. Buy or sell goods

CPA: A principal and agent relationship requires a: a. written agreement. b. power of attorney. c. meeting of minds and consent to act. d. specified consideration.

c. meeting of minds and consent to act.

CPA: Simpson, Ogden Corp.'s agent, needs a written agency agreement to: a. enter into a series of sales contracts on Ogden's behalf. b. hire an attorney to collect a business debt owed by Ogden. c. purchase an interest in undeveloped land for Ogden. d. retain an independent general contractor to renovate Ogden's office building.

c. purchase an interest in undeveloped land for Ogden.

Assume that S wants to sell his house and B is interested in buying it. If A is an agent who normally handles such transactions, A may represent: a. S or B, but not both. b. S and B, but only with the informed consent of S. c. S and B, but only with the informed consent of B. d. S and B, but only with the informed consent of S and B.

d. S and B, but only with the informed consent of S and B.

A principal owes an agent a duty of: a. reimbursement. b. indemnification. c. compensation. d. all of the above.

d. all of the above.

An agent who violates a fiduciary duty is liable to the principal: a. for breach of contract. b. in tort for losses caused. c. in restitution for profits made. d. all of the above.

d. all of the above.

If an agent has an interest in the agency subject matter, the agent's authority terminates upon: a. the death of the principal. b. the bankruptcy of the principal. c. a revocation of authority. d. the mutual agreement of the parties.

d. the mutual agreement of the parties.

When do contracts need to be written?

if work will take more than 1 year to complete OR 'equal dignity doctrine' (involves a sale of land)

What if theres no agreement as to the amount of compensation?

principal will pay the agent the customary fee paid in the industry

power given as security

such a power-including an agency coupled with an interest-is irrevocable

Revocation of authority

termination by PRINCIPAL ex.) House owner no longer wants to sell his house

Statute of Frauds

usually can be oral agreement but sometimes contract law requires a writing

Agent's Duty to Account

- Agent must keep accurate records of all money or property received during agency within reasonable time or as specified in agreement - Agents must be able to trace money and property - Agent should not co-mingle funds ex.) must tell P how much you are spending

Principal's Duty to Agent

Compensation Indemnification Performance Tort Duties

principal-independent contractor relationship

Contractor is an agent if P has hired A to perform service, but A has discretion in "manners and means" of performance ex.) hiring a realtor to sell your house

T/F: A person who engages an independent contractor to do a specific job has a right to control the conduct and activities of the independent contractor in the performance of the contract.

False

T/F: An agent has no duty to account for property or gifts received.

False

T/F: The relationship of principal and agent exists only when one party exercises the right of control over the actions of another.

False

Morris is a salesperson for Acme, Inc., a manufacturer of household appliances. Morris receives a commission on all sales made and no further compensation. He drives his own automobile, pays his own expenses, and calls on whom he pleases. While driving to make a call on a potential customer, Morris negligently collides with Hudson. Hudson sues Acme and Morris. Who should be held liable?

Morris is held liable and ACME cannot be sued since Morris is an Independent Contractor

Nature of Agency

P and A agree that A will act on the behalf of P, typically so A can do business with a Third Party - use objective standard (ie "reasonable person") -something the principal could be doing themselves

Principal's Tort Duties

P must disclose known risks involved to A -Safe working conditions if ee -Disclose and Warn

Fiduciary Duty

The duty owed by the agent to the principal to act with utmost loyalty and good faith includes: No conflicts of interest, no self dealing, duty to not compete, confidential info., account for financial benefits (bribes, kickbacks and gifts)

T/F: A principal is under no duty to reimburse his agent for unauthorized expenses the agent incurs.

True

T/F: The principal's right to control the conduct of the agent is the most significant factor in determining whether an employment relationship exists.

True

T/F: The principal-agent relationship is a fiduciary relationship.

True

Parker, the owner of certain unimproved real estate in Chicago, employed Adams, a real estate agent, to sell the property for a price of $25,000 or more and agreed to pay Adams a commission of 6 percent for making a sale. Adams negotiated with Turner, who was interested in the property and willing to pay as much as $28,000 for it. Adams made an agreement with Turner that if Adams could obtain Parker's signature to a contract to sell the property to Turner for $25,000, Turner would pay Adams a bonus of $1,000. Adams prepared and Parker and Turner signed a contract for the sale of the property to Turner for $25,000. Turner refuses to pay Adams the $1,000 as promised. Parker refuses to pay Adams the 6 percent commission. a. what duties were breached? b. Does A get paid?

a. -duty to inform/notify Parker about Turner's willingness to pay $280k. -duty to performance/diligence -multiple Fiduciary Duties: engaging in conflicting interests, duty to compete, account for financial benefits b. No, he will lose the $10k kickback, the 6% commission and any other money made

Ann is authorized to sell her principal's property for $10,000. If Ann sells it for $11,000, then: a. she may pocket the additional $1,000. b. she has a duty to account to the principal for the additional $1,000. c. she must give the $1,000 back to the third party. d. none of the above.

b. she has a duty to account to the principal for the additional $1,000.

Any contracts resulting from the appointment of an agent by a minor are: a. void. b. voidable. c. unenforceable. d. none of the above.

b. voidable.

Which of the following is not a duty owed by an agent to her principal? a. Obedience b. Accounting c. Information d. All of the above are duties of the agent.

d. All of the above are duties of the agent.

Which of the following will not terminate an agency? a. Lapse of time b. Revocation of authority c. Renunciation by the agent d. All of the above will terminate the agency.

d. All of the above will terminate the agency.

Peter listed a real estate with Ron, a realtor, pursuant to a listing agreement, which was good for 90 days. Two months later, Peter decides not to sell the property and revokes Ron's authority. a. Peter cannot revoke Ron's authority. b. Peter has the power to revoke Ron's authority, but does not have the right to revoke it. c. Peter may be liable to Ron for damages for breach of contract. d. Two of the above are correct, (b) and (c).

d. Two of the above are correct, (b) and (c).